BTB REIT (BTB.UN) AI Stock Analysis

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BTB REIT

(TSX:BTB.UN)

Rating:78Outperform

Price Target:

C$4.00

▲(8.70%Upside)

BTB REIT benefits from strong financial performance, attractive valuation, and positive earnings call insights. Although technical indicators suggest potential near-term volatility and challenges such as debt levels and occupancy rates need addressing, the overall outlook remains positive, supporting a solid stock position.

Positive Factors

Analyst Recommendation

Analyst recommends BTB REIT a BUY, largely supported by a highly attractive distribution that is supported by existing cash flow.

Industrial Segment Performance

Healthy operating performance from the industrial segment drives growth.

Valuation

BTB’s units currently trade at an implied cap rate of 7.8% or a discount to NAV estimate of 13.3%, which compares favorably to the REIT’s peers.

Negative Factors

FFO Performance

FFO per unit drops 14% year-over-year.

Interest Expense

Greater interest expense and tenant bankruptcy negatively impacted interest expense.

Refinancing Impact

Refinancing mortgages over the past year at higher rates led to greater interest expense and the weighted average interest rate rose 41 bps year-over-year to 4.69%.

BTB REIT (BTB.UN) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$322.17M

Dividend Yield8.15%

Average Volume (3M)76.98K

Price to Earnings (P/E)8.3

Beta (1Y)0.75

Revenue Growth3.34%

EPS Growth10.20%

CountryCA

Employees81

SectorReal Estate

Sector Strength55

IndustryREIT - Diversified

Share Statistics

EPS (TTM)0.09

Shares Outstanding88,024,110

10 Day Avg. Volume54,393

30 Day Avg. Volume76,981

Financial Highlights & Ratios

PEG Ratio0.09

Price to Book (P/B)0.66

Price to Sales (P/S)0.00

P/FCF Ratio2.31

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$3.55

Price Target Upside-3.53% Downside

Rating ConsensusHold

Number of Analyst Covering2

BTB REIT Business Overview & Revenue Model

Company DescriptionBTB REIT (BTB.UN) is a real estate investment trust based in Canada, primarily focused on owning and managing a diversified portfolio of commercial properties. The company's assets are predominantly located in major urban centers across Quebec and Eastern Ontario. BTB REIT's portfolio includes office, retail, and industrial properties, providing a stable and diversified income stream. The trust aims to deliver stable distributions to its unitholders while actively seeking opportunities for accretive growth through property acquisitions and strategic property management.

How the Company Makes MoneyBTB REIT generates revenue primarily through the leasing of its commercial properties. The company earns rental income from tenants who occupy its office, retail, and industrial spaces under long-term lease agreements. BTB REIT's revenue model is supported by the strategic acquisition of properties with high occupancy rates and favorable lease agreements, ensuring consistent cash flow. Additionally, the company may engage in property development or redevelopment projects to enhance the value of its portfolio, thus potentially increasing rental income. BTB REIT also benefits from economies of scale and operational efficiencies achieved through effective property management and cost control measures. Significant partnerships with real estate brokers, contractors, and property management firms also contribute to its earnings by enhancing the value and appeal of its assets.

BTB REIT Earnings Call Summary

Earnings Call Date:May 05, 2025

(Q1-2025)

% Change Since: 11.18%|

Next Earnings Date:Aug 04, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong rental revenue growth, increased net operating income, and positive leasing activity, alongside improvements in FFO and AFFO ratios and significant ESG achievements. However, challenges such as a decline in occupancy rates, debt refinancing difficulties, and softness in the industrial sector were also noted.

Q1-2025 Updates

Positive Updates

Strong Rental Revenue Growth

Rental revenue for Q1 2025 stood at $34.4 million, marking a 5.4% increase compared to the same quarter last year.

Net Operating Income Increase

Net operating income totaled $19.8 million, an increase of 8% compared to the same quarter last year, driven by a $1 million cancellation payment among other factors.

Positive Leasing Activity

A total of 138,000 square feet was leased, including a significant 22,000 square foot transaction with the Government of Canada and a 30,352 square foot lease with Value Village.

Improved FFO and AFFO Ratios

FFO adjusted per unit increased by 8.8% to $0.111, while the AFFO payout ratio improved to 72.7% from 83.9% last year.

ESG Achievements

60% of suburban office and retail buildings have environmental certifications, and energy consumption data for 98% of buildings was compiled.

Negative Updates

Occupancy Rate Decline

The committed occupancy rate decreased by 200 basis points since Q1 2024, primarily due to a tenant bankruptcy in the industrial segment.

Debt Refinancing Challenges

Anticipated negative spread of 35 basis points for industrial segment refinancing and 180 basis points for a retail property with a low existing rate.

Industrial Sector Softness

The industrial segment experienced a slowdown, affecting leasing activity and requiring careful analysis for new investments.

Company Guidance

During the BTB Real Estate Investment Trust 2025 First Quarter Results Conference Call, key financial metrics were discussed, highlighting the positive performance and strategic initiatives of the company. BTB reported a total asset value of $1.3 billion, with 6.1 million square feet of real estate across 75 properties. The portfolio's occupancy rate stood at 92.5%, with a committed occupancy rate of 92.5% as well. Rental revenue increased by 5.4% to $34.4 million, and net operating income rose by 8% to $19.8 million, driven by higher rents and cancellation payments. The AFFO adjusted payout ratio improved to 72.7% from 83.9% the previous year, reflecting increased net operating income. The company issued Series I convertible debentures with a 7.25% coupon, raising $40.25 million, and used the proceeds to redeem Series H debentures and reduce credit facility debt. BTB maintained its distribution to unitholders at $0.075 per unit, resulting in an annualized distribution of $0.30 per unit. The total debt ratio was 57.7%, and liquidity improved significantly to nearly $31 million. Leasing activity included securing new long-term tenants, such as the Government of Canada, and achieving a 5.1% lease renewal spread.

BTB REIT Financial Statement Overview

Summary

BTB REIT showcases a strong financial profile with consistent revenue and profit growth, efficient operations, and a stable balance sheet. While the company demonstrates excellent margin performance and cash flow generation, the high debt level and recent free cash flow contraction warrant monitoring.

Income Statement

Very Positive

BTB REIT has demonstrated strong financial performance with consistent revenue growth over the years, increasing from $92.97M in 2020 to $131.81M in TTM. The gross profit margin remains robust at approximately 58% for TTM, indicating efficient cost management. The net profit margin is healthy at around 29.74% TTM, reflecting solid profitability. EBIT and EBITDA margins are also strong at 51.31% and 58.04% TTM, respectively, showcasing operational efficiency.

Balance Sheet

Positive

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 1.49 in TTM, which is typical for a REIT. The company maintains a healthy return on equity (ROE) of 7.91% TTM, indicating efficient use of equity. The equity ratio stands at 39.21% TTM, which reflects a balanced capital structure, though the high debt level is a point of caution.

Cash Flow

Positive

BTB REIT's cash flow is strong, with a solid operating cash flow to net income ratio of 1.35 TTM, indicating robust cash generation. The free cash flow to net income ratio matches this, further emphasizing cash efficiency. However, the free cash flow growth rate is negative at -19.78% from the previous year, indicating some volatility in cash generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	131.81M	130.03M	127.83M	119.50M	100.34M	92.97M
Gross Profit	76.50M	75.05M	75.38M	70.43M	56.34M	51.26M
EBITDA	76.50M	75.84M	71.30M	63.12M	49.58M	44.61M
Net Income	39.20M	38.74M	36.60M	38.15M	17.36M	-22.60M
Balance Sheet
Total Assets	1.26B	1.26B	1.23B	1.18B	1.13B	926.67M
Cash, Cash Equivalents and Short-Term Investments	5.45M	2.47M	912.00K	2.40M	7.19M	9.06M
Total Debt	736.96M	735.24M	724.23M	692.15M	687.72M	552.49M
Total Liabilities	768.52M	761.72M	749.99M	717.27M	725.48M	584.60M
Stockholders Equity	495.94M	494.28M	477.65M	462.07M	404.43M	342.07M
Cash Flow
Free Cash Flow	52.93M	66.00M	70.80M	131.95M	56.34M	45.97M
Operating Cash Flow	52.93M	66.00M	70.85M	66.24M	56.54M	46.15M
Investing Cash Flow	-23.41M	-19.58M	-46.38M	-65.71M	-71.73M	12.13M
Financing Cash Flow	-25.85M	-44.87M	-25.96M	19.48M	13.32M	-51.02M

BTB REIT Technical Analysis

Technical Analysis Sentiment

Positive

Last Price3.68

Price Trends

50DMA

3.54

Positive

100DMA

3.40

Positive

200DMA

3.36

Positive

Market Momentum

MACD

0.03

Positive

RSI

61.81

Neutral

STOCH

68.06

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:BTB.UN, the sentiment is Positive. The current price of 3.68 is above the 20-day moving average (MA) of 3.63, above the 50-day MA of 3.54, and above the 200-day MA of 3.36, indicating a bullish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 61.81 is Neutral, neither overbought nor oversold. The STOCH value of 68.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:BTB.UN.

BTB REIT Peers Comparison

Overall Rating

UnderperformOutperform

Sector (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FCD.UN	80 Outperform	C$221.56M	7.80	9.43%	8.69%	5.06%	43.11%
PRV.UN	80 Outperform	C$366.44M	12.87	5.68%	7.85%	-1.07%	684.07%
BTB.UN	78 Outperform	C$322.17M	8.26	8.03%	8.15%	3.34%	10.20%
NET.UN	78 Outperform	C$113.90M	7.10	11.99%	6.24%	-0.90%	9.33%
Sector *	66 Neutral	£947.02M	13.94	2.04%	5.28%	11.04%	38.13%
MRT.UN	59 Neutral	C$375.19M	―	-3.77%	4.17%	0.18%	68.25%

* Real Estate Sector Average

Performance Comparison

TSE:BTB.UN

BTB REIT

3.68

0.74

25.17%

TSE:MRT.UN

Morguard Real Estate ate

5.77

0.64

12.48%

TSE:NET.UN

Canadian Net Real Estate Investment Trust Trust Units

5.55

0.84

17.83%

TSE:FCD.UN

Firm Capital Property

5.98

1.24

26.16%

TSE:PRV.UN

PRO Real Estate Investment

5.73

1.05

22.44%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: May 17, 2025